We can see from the chart above that, since then, money flows into the Consumer Discretionary stocks have been quite modest. Indeed, we see that the sector ETF (XLY; blue line) has not made a new high during the recent rally. Similarly, adjusted relative dollar volume flows (pink line) have barely budged above the 200 day moving average (red line), despite strong flows in other sectors (such as Industrials).

The five highly weighted stocks within XLY that I use to calculate the flow data are CMCSK, TWX, HD, DIS, and MCD. Of the group, we have outright negative flows over the past ten trading sessions in CMCSK and DIS. Both also display flows below their 200-day moving average. The only stock in the group with strong inflows is MCD, which has shown consistently positive flows over the past month.

The inability of the Consumer Discretionary stocks to attract greater interest during a strong market period leads me to question how the sector will hold up during an eventual market correction. DIS, in particular, strikes me as undergoing institutional distribution: six of its last ten trading sessions have displayed net dollar outflows.

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About Me

Author of The Psychology of Trading (Wiley, 2003), Enhancing Trader Performance (Wiley, 2006), and The Daily Trading Coach (Wiley, 2009) with an interest in using historical patterns in markets to find a trading edge. I am also interested in performance enhancement among traders, drawing upon research from expert performers in various fields. I took a leave from blogging starting May, 2010 due to my role at a global macro hedge fund. Blogging resumed in February, 2014, along with regular posting to Twitter and StockTwits (@steenbab).